Businesses’ Political Stances Have “Very Real Consequences,” Both Good and Bad

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After President Donald Trump signed an executive order last Friday afternoon banning entry visas to citizens of the predominantly Muslim countries of Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen, the response was immediate and loud. Many praised Trump for keeping his campaign promises, and many others criticized the ban as xenophobic and illegal.

Members of the latter group organized an impromptu protest on Saturday at John F. Kennedy International. The New York Taxi Workers Alliance, many of whose members are Muslim, held a one-hour strike in solidarity with the travelers who suddenly found themselves, despite their valid visas and green cards, unable to enter the United States.

And then the popular ride-sharing company Uber announced that it would turn off surge pricing at JFK.

Uber vs. Lyft

Although Uber has never come out in favor of Trump’s executive order, it was still seen as undermining the taxi strike and seeking to profit off of the situation. An Uber spokesperson claimed that the decision was made to avoid profiting from the increased demand during the strike, but the damage was done, and the hashtag #DeleteUber was born. All over Twitter, users posted screenshots of themselves deleting the app.

Perhaps #DeleteUber wouldn’t have been so easy had there not been an available alternative. Uber’s no. 1 rival, Lyft, swiftly came through with a statement. Logan Green, CEO of Lyft, announced – on Twitter, where else? – that “Trump’s immigration ban is antithetical to both Lyft’s and our nation’s core values” and that the company will be donating $1 million over the next four years to the American Civil Liberties Union. Mind you Lyft also operated during the taxi strike, but to a consumer base that skews urban and liberal, it emerged as the good guy thanks to savvy social media use.

“We see companies, large and small alike, being both praised and targeted for how they appear to be either in support of or opposed to President Trump and his policies,” says David C. Wyld, Professor of Management at Southeastern Louisiana University and a strategic management consultant. “We see websites now like Great Company actually rank companies by how much they agree with the President’s actions.”

Companies Go Political

A hashtag similar to #DeleteUber soon appeared when Starbucks’ CEO Howard Schultz announced that his coffee chain company will be hiring 10,000 refugees over the next five years. Unsurprisingly, this was met with a backlash, with #BoycottStarbucks as its rallying cry. (And also unsurprisingly, as happens with every well-meaning hashtag, #BoycottStarbucks has been appropriated by left-leaning Twitter users.)

But nonetheless, Starbucks had to make a statement that customers of all political persuasions are welcome. And Uber CEO Travis Kalanick resigned from Trump’s advisory council, announcing that it was not “meant to be an endorsement of the president or his agenda but unfortunately it has been misinterpreted to be exactly that.”

But as Wyld observes, even if the political stance is merely perceived, there are “very real consequences” for companies. There are grassroots campaigns “taking action both for and against companies based on their CEO’s or other top executives’ stances on Trump.”

As of the time of this writing, a host of companies have joined Lyft and Starbucks in criticizing the immigration ban, including Airbnb, Apple, Coca-Cola, Facebook, Ford, Google, Netflix, Nike, and yes, Uber. As the New York Times reported, Microsoft, Amazon and Expedia have been vocal in their support of the Washington State Attorney General’s Office, who is challenging the executive order in federal court.

You might have noticed that the tech industry is overrepresented among the above-named companies. This should be no surprise, given that Silicon Valley and other big tech companies rely heavily on skilled immigrant labor. The tech industry might have its own diversity problems, but they differ from those that plague more “traditional” industries in the U.S.

The New York Times published an article breaking down corporate responses to Trump’s executive order by industry. Tech, as the newspaper reported, was the “voice of the opposition,” whereas finance, which also attracts large numbers of skilled immigrants, gave a much more lukewarm response. Wells Fargo busied itself in “reviewing” the order, and Morgan Stanley went with “monitoring” the developments.

Goldman Sachs’ CEO Lloyd C. Blankfein, however, released the following statement: “For us to be successful, our men and women must reflect the diversity of the communities and cultures in which we operate. That means we must attract, retain and motivate people from many backgrounds and perspectives. Being diverse is not optional; it is what we must be.”

Depending on what industry you’re in, there are clear economic benefits to be had in taking one side or the other. Lyft, for example, has surpassed Uber in Apple’s App Store for the first time. And Starbucks may not have risked its avowal to hire refugees (instead of, say, veterans, to cite a common criticism) had its target consumer not been urban and affluent. The core Starbucks customer is educated, around 42 years old and earning on average $90,000 a year.

“All of this means that both for companies and their top executives, the world has indeed changed – quickly!” Wyld observes. “Now and for the foreseeable future, both the political stances of firms and their top executives will be under increased scrutiny. And with just one tweet, with just one interview or press release, and yes, with just one pissed-off person on social media, a firm’s reputation and its bottom line can be put at risk based on political stances both real and perceived.”

Where Does CSR Fit In?

Businesses have long played a role in political and social issues. But it wasn’t until recently that it’s become part of a business’ brand and image.

So could this trend of taking an open political stance be related to the rise of corporate social responsibility? The broad concept of CSR generally refers to a company’s self-regulation efforts, making sure that it is compliant with the law and general ethical standards. Some companies go further in their CSR initiatives by doing social good that goes beyond what they’re legally required to do. As an extremely simplified example, instead of just vetting suppliers and factories for child labor, a company might also donate money to UNICEF.

As a trend, CSR is here to stay. Consumers are becoming more aware of the environmental and social impact of their favorite brands, and business schools now offer classes on sustainability. At the University of Pennsylvania’s prestigious Wharton School, students can pursue an MBA-MES joint degree – integrating business acumen with environmental knowledge.

According to an article in the Harvard Business Review, CSR programs fall into three “theaters of practice.” These are “focusing on philanthropy,” “improving operational effectiveness,” and “transforming the business model.” The first one does not improve business performance. The second one, which might include investing in employees’ education or using recycled materials, may or may not benefit the bottom line through improving the company’s reputation. The third one creates “new forms of business specifically to address social or environmental challenges.”

One could argue that Starbucks’ plan to hire refugees falls into the second theater. CEO Schultz is doing what he believes to be right, which of course does not align with everyone else’s viewpoints. Only time will tell whether the hiring plan is actually carried out and whether #BoycottStarbucks will negatively affect revenue.

“I think what we are seeing is perhaps a new level of corporate social responsibility taking hold,” says Wyld. “For companies that believe in ‘doing well by doing good,’ they may see a true bifurcation in their actual and even their potential customer bases into ‘us,’ or customers who agree with our stance, and ‘them,’ or those who do not. We see this across our entire society today. And whether it will ultimately be for good or for bad, today it's simply the new, new reality that companies must face.”

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